As those familiar with the tech industry may already know, Microsoft made a record-breaking acquisition on Jan. 18th. The deal was the purchase of Activision Blizzard — the largest third-party publisher in the gaming industry — to the tune of $69 billion. This sum made the transaction the most expensive buyout not just in gaming but in the history of the entire tech industry.
Industry juggernauts buying up small publishers is nothing new, but Activision Blizzard’s scale and prolific track record put this deal almost in a class of its own. The company is home to numerous gaming franchises including first-person shooters Call of Duty and Overwatch, the virtual fantasy world of World of Warcraft, and even Candy Crush. No wonder the price tag ran so high.
This bold acquisition is better understood in context, where it’s only a conspicuous example of an industry-wide move toward consolidation. Microsoft’s archrival Sony also tendered a large buyout in 2021, Tencent continues to hold stakes in several developers, Electronic Arts has swallowed up a few smaller firms and so on.
As I see it, this trend is only going to continue in the coming years — I wouldn’t even be surprised if this newly-set record is broken. At risk of getting too technical, Karl Marx already theorized in the late 19th century that capitalism’s tendency toward survival only of the fittest producers would inevitably lead to monopolies.
Marx observed “trusts” in his lifetime, where industrial companies would collude to fix prices and manage production, but the modern rise of mergers only vindicates his prediction further. In the gaming industry and the global economy in general, statistical analysis has shown that the money in acquisitions is only increasing in recent years.
In the case of Microsoft specifically, its push toward acquisitions is part of a broader effort to gather a roster of quality titles exclusive to Xbox — described by games journalist Jessica Conditt as getting “a few friends to keep Master Chief company.” Exclusives have been standard practice for a long time in video game “console wars” to incentivize buying them, but they’re still annoying. If I ever bought a console just to play one game — which many people do — it would feel more like arm-twisting coercion than an opportunity to play something.
The fact that Microsoft in particular made the purchase also speaks to a topic I discussed in my column three weeks ago, which is that everything is becoming a subscription rather than a one-time purchase. When writing that article, I somehow glossed over the service known as Xbox Game Pass — a renewing monthly payment allowing access to a few games on both the console and Windows computers.
As soon as they inked the deal, Microsoft was proud to announce that Blizzard games would be coming to their Pass, so I guess the trend of subscription payments for everything is showing no signs of slowing. Ironically, I was even praising Blizzard’s Overwatch for its “old,” non-subscription monetization model, but this deal may indicate that that will change.
Even more bizarre is Microsoft CEO Satya Nadella’s assertion that buying Activision Blizzard will help the company expand into the metaverse going forward. For context, the term “metaverse” refers, at least in theory, to a shift in the way we use technology rather than just new games and websites. Common concepts evoked by the metaverse include completely virtual worlds, “augmented reality” via cameras adding things to the real world and, most importantly, possessions and economic transactions that move between these worlds.
NFTs — those ugly, planet-incinerating monkey drawings — are often perceived as one example of this — a commodity that you can transfer between different websites — despite them not really working. Nadella’s discussion of the metaverse in the future, like NFTs, also makes absolutely no sense.
“You and I will be sitting on a conference room table soon with either our avatars or our holograms,” he explains. “Guess what? The place where we have been doing that forever…is gaming.” Speaking for Microsoft he continued to add, “The way we will even approach the system side of what we’re going to build for the metaverse is, essentially, democratize the game building,” whatever that means.
When asked by Polygon what exactly the metaverse is for besides just playing video games, Nadella’s free association moved to a new title in the Forza racing game series and how it will be a window into Mexican culture. This seeming non-sequitur does not make the metaverse any easier to understand.
To me, Microsoft’s latest deal epitomizes many of the largest problems in video game subculture at the moment, all attributable to the modern economy. The acquisition would not be possible without the triumph of massive corporations over smaller firms before it, the pivot away from one-time purchases toward time-based rents and overtures to an ill-defined and frankly boring future in the metaverse.
You lost me at “Karl Marx”